US States start to Battle it out to Win the Eye of the Algae Industry

Gov. Jan Brewer signed into law a pair of bills recognizing so-called “algaculture” following passage in the Arizona state legislature that will see the Grand Canyon State encourage and support the algae industry. Arizona is the second American state, after Ohio, to classify the algae industry as agriculture. It’s a shot best heard by state legislatures nationwide, algae is going commercial in specialty chemicals right away with fuel products coming later. Florida is getting in the game in a way, too.

Dr. Mark Edwards, an Arizona State University professor, author, and well known “algaevangelist,” whose work focuses on resolving world hunger and pursuing sustainable energy with green solutions said, “There are those of us who believe Arizona will be the algae state. I’m just delighted.” Edwards is also AlgaeBio’s V-P of Corporate Development and Marketing.

Two bills were introduced by Rep. Matt Heinz (D-Tucson) back in January. The first algae-friendly bill, HB 2226, widens the tax definitions of agricultural real property in Arizona to include lands devoted to “algaculture”, offering the same lower property tax rates enjoyed by other farming businesses.The second, HB 2225, will add the growth and harvest of algae to the definition of agricultural state trust lands, allowing the Arizona State Land Department to issue agricultural leases for algaculture operations.

Edward’s enthusiasm shows with, “It’s great to see such timely legislation that makes so much sense, and fits so well for this state — because of our non-arable land, flat land, the abundance of waste water and brine water, and 360 days of sunshine a year. Arizona has an opportunity to lead, globally, because a lot of other jurisdictions, other countries, will follow this example.”

The new state legislation is expected to allow Arizona to build a more appealing business climate for algae companies seeking affordable land to grow and harvest algae. It will also allow the people of Arizona to capitalize on the current business climate in the algae industry, which is seeing more and more ventures, whether they’re focused on biofuels, nutriceuticals, pharmaceuticals, or animal feed and move from the lab to the boardroom, backed by serious investment.

Admittedly Arizona is on an inside track with location, backing it up now with fair treatment for tax purposes and from Dr. Edwards a load of common sense. “I and others have been lobbying for something like this for almost three years now. Whether the water is running around a raceway, or bubbling in a vertical column, this is in fact agriculture — we’re farming in water,” says Dr. Edwards.“This legislation, really, is an enabler. It makes algae production in Arizona more business-friendly. It will also help farmers engage in the algae industry, because they’re going to start thinking about using algae to remediate their manure and their waste streams,” Edwards adds.

Here’s the ‘killshot’ that other states are going to have to come to grip with and top for competitiveness in locating facilities and the jobs:

Edwards continues, “And remember, growing is only one part of it. Much of the tax comes from finished products. If we can invest in our future, with more product going into the supply chain, retail sales will make up for the lower taxes many, many times over. The consumers benefit. The taxpayers benefit. It’ll all come back around, big-time. And that was really the argument that got (the legislation) through.”

Florida is in part, listening. New energy legislation in the state of Florida became law April 14 despite Florida Gov. Rick Scott’s failure to sign the bill. The legislation, HB 7117, contains several measures aimed to encourage the development and expansion of the renewable energy sector within the state, including biofuels production and distribution. The bill also addresses policies and restrictions for growing certain strains of algae and cyanobacteria.

While Ohio and Arizona are getting competitive for business growth, Florida is fumbling with limits on an odd assortment of sales tax exemptions, for some unimaginable reason. There is also an investment tax credit related to biofuels production. Under the bill, the credit can apply to up to 75 percent of all capital costs, operation and maintenance costs, and research and development costs that are incurred between July 1, 2012, and June 30, 2016. The credit cannot exceed $1 million per fiscal year for each taxpayer. A limit of $10 million is made per fiscal year for all taxpayers – how’s that for not looking, well, serious.

The Florida law includes provisions related to the cultivation of some algae species. Under the new law a person may not cultivate a nonnative plant, algae, or blue-green algae – including genetically engineered plants, algae and blue-green algae in plantings greater in size than two contiguous acres, except under a special permit.

Florida has dived right into the Orwellian or big brother knows better for you mentality with a permit is not required to cultivate plants that, based on experience or research data, do not pose the risk of becoming an invasive species. Plants commonly grown in the state for the purpose of human food, commercial feed, feedstock, or forage are not covered by the provision. Additional exemptions could be made to the permitting requirements based on consultations with the Institute of Food and Agricultural Sciences at the University of Florida. A bureaucratic barrier is now fully set up.

Ohio and Arizona are in the hunt for algae producers, with Florida nibbling at the idea. Perhaps a boom of activity will spark other states and load a little sense into Florida. It’s happening, and those are the states on the front line.